When Max launched in 2014 as a way to help individual investors keep cash safe while earning higher yield, few paid much attention. Due to the Fed’s many rate cuts during the financial crisis, people had become accustomed to the idea that cash was a zero-return asset class, and few gave it much thought.

Fast forward to 2020 and everyone seems to be focused on cash and how to earn more. Some of the most influential journalists have picked up the cause, including Jason Zweig at The Wall Street Journal and Jim Cramer on Mad Money, urging clients not to ignore what they could be earning on cash.

Everyone seems to be getting in on the game now, trying to convince you to move your funds to a robo advisor or brokerage firm. But not all of these solutions are the same, and you should always be sure to read the fine print.

Industry experts Bob Veres and Joel Bruckenstein, who publish an annual report on financial advisor technology called the T3/Inside Information Advisor Software Survey, note that the most popular solution among independent financial advisors for helping clients manage the cash they hold outside of the brokerage account is a solution called MaxMyInterest, or “Max” for short.

Why Max is a smart choice for a client’s held-away cash

There are good reasons why Max has become so popular with financial advisors. Max was built out of the simple desire to help people, so a lot of care was put into designing a service that delivers the best yields to clients while being free from any conflicts of interest.

Max works with financial advisors from all types of advisory firms, from independent RIAs to hybrid firms managing trillions of dollars of client assets. Max isn’t a broker or custodian; it simply offers software that acts much like an air traffic controller for cash, helping individuals earn more on cash that they hold in their own bank accounts in a very simple and transparent way.

Notably, Max doesn’t cross-sell other products or sell data. There is no ulterior motive. The company was founded to help people better manage their cash, bringing greater efficiency and transparency to a market that, up until this point, has been opaque and inefficient to the detriment of depositors.

Max includes smart features, such as a patented optimization process that helps ensure a client’s funds are earning the most they can, even as banks change their rates. Intelligent Fund Transfers automatically move funds with one click. And Consolidated Tax Reporting makes tax time as easy as forwarding an email to your accountant.

Why Max appeals to so many clients

Max is simple and easy-to-understand. With Max, funds always remain in clients’ own FDIC-insured bank accounts, held directly in their own names. As a result, clients retain full and same-day access to funds, and can call any bank directly to check on their money, or view all balances through a dashboard on any computer or mobile device. 

But Max is more than just a series of bank accounts – it’s a completely digital user experience where clients can open new accounts in 60 seconds without having to visit a bank’s website, create new usernames and passwords, or deal with trial deposits. The patented Max Common Application is fast and simple, and advisors can even pre-fill the application form for clients with just a few clicks.

Max also delivers preferred rates, higher than those available to the general public, and has arranged other preferred terms, such as higher daily ACH limits and no minimum balance requirements.

Whether used for its built-in cash sweep or used with a set amount of cash, Max is a flexible solution to help a variety of client needs, including:

• Higher yields and broader FDIC-insurance for those with higher balances of cash
• As a helpful tool to establish or grow an emergency fund
• As a way for retirees and those drawing an income to earn more on idle cash

Why Max is the #1 choice for advisors

Since 2015, Max has served the needs of independent financial advisors and continues to innovate to meet the needs of advisors, soliciting advisor feedback at every turn.

Max also offers integrations with leading reporting platforms, including a recently announced integration with Orion. 

Financial advisors can learn more by visiting MaxForAdvisors.com or by emailing advisors@maxmyinterest.com. Clients can get started earning more right away at MaxMyInterest.com and may choose to link their advisors during enrollment.

If you have a financial emergency — an unexpectedly high medical bill, a sudden move across the country, or a job loss — how will you pay for it? Most financial advisors recommend keeping a separate emergency fund that you wall off from your retirement and other lifecycle-related savings accounts. This will allow you to meet urgent funding needs without having to take money from your retirement or educational accounts, which can lead to penalties and tax bills.

It can be difficult to get started with an emergency fund, especially if you’re focused on specific savings goals like buying a house or paying tuition. The best way to make saving a habit is to use behavioral-finance techniques to your advantage. Open an online-savings account at a bank that pays high interest rates, and set up automatic monthly transfers from the main checking or brokerage account where your paycheck gets deposited. That way, you won’t have to think about making a manual deposit. It’s okay if you start with a small amount; the important thing is to be consistent.

While you’re setting up your emergency fund, make sure that you’re earning the highest interest rate possible. This will harness the power of compound interest, which means that the money in your account will earn interest as it sits there, and, if you don’t take it out, will accumulate as the interest goes back into the account to earn even more interest.

Why does this matter? Your emergency fund, by design, is money that you are going to keep on the sidelines and — hopefully — never have to use. Because you are not going to invest it in securities, which are risky, you want to make sure that you can earn as much as possible in interest on your cash in this account. Earning higher interest can help your emergency fund keep pace with inflation.

It’s also important that your emergency fund be kept in an account that’s fully liquid. If you have to access this money, you may need it immediately; you won’t have time to wait the three days that a money market fund will take to get the money back to you. An online savings account solves this problem. You can have the money wired back to your checking account same-day.

Are these accounts safe? Any bank account that is FDIC-insured is backed by the federal government up to $250,000 per depositor, per account type, per institution. If the bank goes under — unlikely, but still possible — the FDIC will return your money up to this limit.

One good way to make sure your emergency fund is FDIC-insured and kept in the highest-rate online-savings accounts possible is to use technology solutions, like MaxMyInterest, to manage it. Max isn’t a bank; it’s software that automatically allocates your funds among high-yielding accounts at online banks, to make sure your money always earns as much as it can safely. You can learn more at MaxMyInterest.com.

For a generation that’s grown up with a smartphone in hand, millennials are surprisingly wedded to the most old-fashioned of investments: cash. That’s a conservative strategy, but it raises the specter of whether these young workers will build their portfolios quickly enough.

Americans between the ages of 18 and 29 were the most likely age group to choose cash as their ideal place to stash money they don’t plan to use within a decade, according to a survey from Bankrate.com. Thirty-nine percent of millennials said they would invest their money in cash if they didn’t need it within 10 years, triple the number who said they would buy stocks.

That could be a problem, because investment returns, compounded, tend to grow over time, if a portfolio is performing well. The more millennials earn on their investments today, the more these gains can grow throughout their working years. For Americans as a whole, one in four said they’d pick cash over other long-term investments. The report also found that Americans feel they haven’t saved enough money. For every survey participant who thought they had saved a sufficient amount, two survey participants said they don’t have a large enough savings reserve.

The report points to twin problems investors have today: a propensity to hold cash to avoid risk, alongside a nagging feeling that their portfolios won’t be large enough to support their future needs.

There are many reasons why millennials, and Americans as a whole, might feel more comfortable with large cash holdings. The global financial crisis is only a few years in the past, and many market participants might still hold bad memories of that experience. Warren Buffett’s Berkshire Hathaway now holds $111 billion in cash. Many millennials either suffered losses among their own investments during the last crisis or watched family members lose money in the markets. With cash, they’re not taking a gamble on stocks.

Similarly, the housing market crash and subprime-mortgage bust that accompanied the crisis may have sparked an aversion to buying real estate (or perhaps millennials just can’t afford to buy houses). Millennials as a group also owe record amounts of student debt, and they may feel they can’t risk the money needed to make those payments. All this contributes to a desire to hold cash rather than riskier investments that hold the potential for a higher return, such as real estate investing itself, if millennials are looking for profit opportunities they have many options open to them, such as real estate investing courses via Roofstock, this gives them the option and interest to invest in something other than cash, and for possible massive returns too.

For investors of any age who want to hold a large portion of their portfolios in cash, it’s essential to consider both the interest rate on that cash and the degree to which their cash is protected by government deposit insurance. According to Bankrate.com, the average interest rate on bank deposits in U.S. savings accounts stands at 0.09%, while some online bank savings accounts pay more than 1.80% in interest, often with no minimum balance or monthly fees. Because of the power of compounding, that additional interest can make a large difference over a millennial’s long investment horizon.

As long as these online banks are guaranteed by the FDIC, the deposits are insured up to $250,000 per depositor, per account type, per bank, to guard against a bank failure. That’s essential for the investor who is holding cash to keep that money safe against all eventualities.

Here at Max, our system is ideal for investors of any age who choose to hold larger amounts of cash. Max helps depositors avail themselves of the higher interest rates paid by leading FDIC-insured banks. For millennials, signing up for Max could be a smart choice. Even if they’re not prepared to take greater risk by buying real estate or investing in the stock market, with Max they can at least earn up to 20 times the national average on the cash that’s sitting in their checking or brokerage accounts, while helping ensure it is fully protected by FDIC insurance.

Learn more about how Max helps investors earn higher yields on cash.

While Max members have always earned much more on cash than the typical American depositor, as interest rates rise, the benefits of using Max are increasing even further. Since 2014, the incremental yield, or alpha, that Max has generated for its members has increased from 0.76% to 1.23%.

According to Bankrate.com, the national average interest rate earned on savings accounts is 0.09%. Max members, however, are earning dramatically more — 1.42% on balances up to $250,000, and an average 1.32% on larger balances up to $1,000,000.

Why does earning more on cash matter? Because interest compounds over time, meaning that the gap between those who manage their cash wisely and those who don’t widens as years go by.  Since all FDIC-insured savings accounts carry a government guarantee and are essentially risk-free, focusing on the banks that can deliver the highest yield makes sense. Leaving your money in a brick-and-mortar savings account that pays the national average — or worse — means you are missing out on the opportunity to earn an additional 1.23%, on average, without taking any additional risk with your money. In fact, because of Max’s feature that helps spread cash across multiple banks to maximize FDIC insurance coverage, many Max members are earning higher yield while taking less risk.

While online banks have gradually raised rates over the past several months, brick-and-mortar banks have yet to do so in a significant fashion. Online banks are able to offer higher interest rates to savings-account holders because they don’t have physical branches to maintain. This means that if you don’t keep your cash in online banks, you likely aren’t keeping pace with rising rates.

For financial advisors, the ability to help clients earn more on their held-away cash — typically cash that advisors don’t see — is a major reason why many are recommending Max to their clients. As a fiduciary, charged with looking out for their clients’ best interest, many advisors feel it is imperative to offer Max to their clients. Incremental yield on cash is, after all, the same as incremental yield anywhere else in a client’s portfolio — but in the case of FDIC-insured cash, it comes without risk.

To learn more about how Max can help you or your clients earn more on cash, visit MaxMyInterest.com or MaxForAdvisors.com.

How can a company, nonprofit, or foundation make the most of its cash? It’s even easier to do now that Max partner American Deposit Management Co. has raised the rates it offers to Max members on FDIC-insured corporate deposits.

Now Max members using ADM’s AMMA savings account for their institutional cash will earn 0.85% — 85 basis points — on up to $25 million of cash, all FDIC-insured. That’s a considerable boost over most business bank accounts that pay close to zero.

As the Federal Reserve has raised rates over the past year, bank depositors have been among the last to benefit — but Max members have been able to take advantage of higher rates automatically. Now institutional clients can also enjoy higher rates.

To a corporate or nonprofit treasurer, or the trustee of a trust, this incremental interest income can make a significant difference. On every $1 million, that’s $8500 in interest each year, in perpetuity. In a regular business-savings account, that money would earn next to nothing.  Moreover, most bank accounts are insured to only $250,000, while the AMMA account can provide up to $50 million in insurance coverage.

Many companies and nonprofits are constrained when it comes to how they invest their cash, preferring safe and liquid instruments over riskier bets. They may use their cash for working capital, or may be required to keep in cash any funds they’ve raised from investors or donors.  

In these situations, it’s crucial to make sure this cash is safeguarded under FDIC protections, which are limited to $250,000 per depositor, per account type, per institution. When Max members use ADM for their corporate cash, they know their money is spread across multiple banks to maximize FDIC coverage.

We at Max use ADM’s solution for our own corporate cash, so we know how useful it can be. Many of our members, who find Max helpful for the cash they hold as individuals, also use ADM to manage cash for their companies, trusts, foundations, nonprofits, or residential associations, including co-ops. And financial advisors, who already use Max to help their clients earn higher yield on cash, often find they can add more value to their client relationships by delivering better solutions for corporate cash as well.

Learn more at MaxForBusiness.com.

Get your stopwatch: the race to intelligent cash management just accelerated.

Max and UFB Direct, an online-banking brand of BofI Federal Bank, have just launched the industry’s fastest account-opening and linking process. It now takes just minutes to open a new Max-linked UFB Direct online savings account.

How is this possible? In partnership with BofI, Max developed new technology that allows the process to go much faster than the usual procedures for opening an account at an online bank.

What this means for Max members: it’s now possible to visit the Max website, apply for a new UFB Direct account, link it to Max, and start optimizing your cash all within minutes.

Financial advisors who use Max can also help their clients open UFB Direct accounts right on the Max site. The new, streamlined linking process means it’s faster than ever to start earning more on cash, FDIC-insured.

We’ve heard from financial advisors that they would like to add clients to the Max platform as quickly and with as little friction as possible. That’s why we made it possible to pre-onboard clients with one click from advisors’ CRM systems. Now, with rapid account opening and linking, clients can get a savings account set up quickly and can start their first optimization right away.

Why does speed matter? Because every moment counts — not just because time is valuable, but also because the power of cash optimization can start working sooner.

Learn more about Max’s intelligent cash management services for individuals, financial advisors, and businesses, nonprofits, and institutions, or contact us with questions: member.services@maxmyinterest.com.

 

This will be the year that banks and fintech companies work together to solve customers’ problems in new ways, industry-watchers predict.

“In 2017, there will be a widening of the gulf between banks that are building meaningful partnerships with FinTech firms and those that think that they are because they have a couple of tech vendors and a procurement department,” JP Nicols, managing director of Fintech Forge and chairman of Next Money U.S, told bank innovation consultant Jim Marous. Financial-industry conferences, including the recent LendIt conference in New York City, have echoed with the same sentiment over the past few months: the banks that successfully tie up with fintech companies will pull ahead of those who don’t.

At Max, we’re proud to be part of this trend. Today, we announced a partnership with BofI Federal Bank, one of the pioneers of online banking, to add their UFB Direct brand to the Max platform.

Through a direct API integration and our patent-pending approach to account opening and linking, we’ve made it possible for clients to open new online savings accounts in less than two minutes, without the need for clients to leave the Max website or complete a cumbersome trial-deposit verification process. UFB Direct is also offering a preferred rate to Max members, who tend to hold balances that are many times larger than typical online bank customers.

Why would a bank partner with Max? Because this integration allows BofI to streamline customer acquisition without the need to spend money on advertising or referral fees, which in turn means they can operate more efficiently than their peers while delivering even higher yields to depositors. UFB Direct will get new customers — Max members — who are savvy about maintaining full FDIC insurance coverage and earning more interest on their cash, and who understand the benefits of online banking.

With the UFB partnership, all Max members will have the ability to link an additional online bank to their Max accounts, increasing the amount of FDIC coverage they can receive.

We believe this partnership represents a true win-win-win opportunity for BofI, for Max, and for our members — and is illustrative of the type of bank-FinTech partnership of which we expect to see more in 2017.

Learn more about Max and how it helps individuals earn more on their cash, FDIC-insured at MaxMyInterest.com.

Or find out how Max helps financial advisors and their clients to optimize cash by visiting MaxForAdvisors.com.

Banks seeking more information about the potential to partner with Max can contact us at info@maxmyinterest.com.

 

This may be the insight that explains everything: people are happier the larger their bank balance grows.

Everyone knows that money can’t buy you love. But cash can buy you happiness, apparently — as long as you don’t spend it. That’s the conclusion of a recent academic paper, “How your bank balance buys happiness: The importance of ‘cash on hand’ to life satisfaction,” by researchers Peter M. Ruberton, Joe Gladstone, and Sonja Lyubomirsky.

Accumulating assets has long been a bulwark against unhappiness. But this study, which looked at UK bank customers, reveals that your ATM receipt can be a better predictor of satisfaction than an overall portfolio statement or your total net worth.

“We find a very interesting effect: that the amount of money you have in your bank account right now is a better predictor of happiness than your aggregate wealth,” Mr. Gladstone told The Wall Street Journal.

The study doesn’t determine why exactly cash makes us happy. But liquidity can confer many advantages: peace of mind, insurance against emergencies, or an ability to pounce on opportunities when they become available.

At Max, our members tell us that they hold onto cash for a myriad of reasons: for dry powder, to snap up assets when their prices drop; for specific future purchases; or for capital calls.

Because Max automatically optimizes members’ cash, keeping it under the FDIC limits and making sure it’s earning the highest possible yield, our members don’t have to worry about whether their cash is safe. They can rest easy knowing that their cash is earning among the highest yields possible, while focusing on the happiness they feel when they look at their Max statement.

To learn more about Max and how it helps optimize yield and FDIC insurance for cash, visit maxmyinterest.com for individuals or maxforadvisors.com for financial advisors.

This week, Max is at the T3 conference in Orange County, Ca., which is spurring us to think about financial advisors and how we can help them best serve their clients.

As financial advisors think about where to put their clients’ cash, many head automatically toward money market funds. But in today’s regulatory environment, where money market funds pay ultra-low rates and can force investors to pay redemption penalties in times of market turmoil, they may no longer be the best choice.

There is a better solution for cash held in brokerage or bank accounts. It’s called Max.  

Some statistics about cash: high-net-worth households in the U.S. are currently holding 23.7% of their assets in cash. That works out to a staggering $3.5 trillion, just among the top 4% of the U.S. population.

Most of this cash is being kept in the wrong place. In money market funds, it is under-earning its potential and it’s not insured.

Clients hold cash for a host of reasons, including as a reserve for a future real estate purchase, private equity capital call, or other asset buy. A recent U.S. Trust survey showed that a majority of clients were holding cash on the sidelines to serve as “dry powder” to capitalize on market opportunities. That’s the same reason why Warren Buffett has said he likes cash so much.

Most financial advisors think that clients aren’t holding much cash because what they see is the cash allocation within the client’s investment portfolio. The reality is that there’s a lot more cash sitting on the sidelines, out of view of the advisor. Most high net worth investors maintain multiple advisory relationships at several institutions. Advisors’ wallet share is only what clients choose to bring to them.

Where is this cash being held? Up until this point, the default for many financial advisors was to keep client cash in a money market fund. This is no longer best practice, especially in a fiduciary environment. It’s difficult to justify offering your clients less of a yield on uninsured cash when there’s a solution that allows them to earn more and stay FDIC-insured.

After the 2008 financial crisis, the SEC imposed new rules on money market funds, rendering them no longer a true cash equivalent. Under the new regulations, retail-held prime funds are subject to redemption gates of up to 10 days and redemption penalties of 1-2% in periods of financial stress. This means that your clients may not be able to access their funds when they need them most. At the same time, yields on money markets are still relatively low, and these funds are not insured.

How can Max solve these problems? Max offers a tool that lets advisors bring more cash into view, help clients earn more on that cash, and help ensure that cash is fully insured. We’ve created a better solution for cash, offering liquidity, higher yield, and greater FDIC insurance. Max doesn’t take custody of clients’ funds. Their cash stays in the client’s own name, while our software acts as a sort of air traffic control system, telling the banks to move funds among the client’s own accounts whenever it’s advantageous to do so to get better rates. In this manner, clients continuously earn the highest yield possible within the FDIC limits. That means Max members can keep up to $5 million per couple insured, and we have a partner solution that can deliver up to $50 million of FDIC coverage per tax ID for business accounts or complex trusts.

Now that money markets are considerably less attractive, isn’t it time to find a better way to manage cash? Learn more about Max at MaxForAdvisors.com.

Cash should be working its hardest for you. That’s especially important for corporate, foundation, and nonprofit cash. This money has to be kept safe — it’s needed for payroll, ongoing expenses, or acquisitions — so it can’t be invested in risky securities. In today’s low-rate environment, it can be tough to find a safe place to keep cash that allows it to earn interest.

Here are three ways treasurers can maximize both safety and yield.

• Online savings accounts

Some online banks offer commercial accounts that yield more than what your brick-and-mortar bank pays. Be aware of FDIC insurance; choose a bank that is part of this government guarantee program, and make sure to keep your company’s account below the $250,000 limit.

While you won’t have a branch, online savings accounts make it simple to move money to and from your company’s regular checking account using ACH (likely the same way your company handles direct deposit for payroll). You can also arrange wire transfers if you need the money to move the same day.

• CDs

A certificate of deposit, which pays a fixed return that’s usually higher the longer the term of the CD, is a safe place to keep your corporate cash — as long as it’s FDIC-insured. The drawback of a CD is that your money is typically locked up until the end of the term, and you may have to pay a fee to retrieve it early. This makes CD a less attractive option for businesses that need access to their cash.

• Max for Business

We think companies should be able to earn a higher yield on their cash, FDIC-insured, just as individuals can by using Max. That’s why we’ve partnered with the American Deposit Management Co. to offer high-yield, FDIC-insured accounts to commercial, institutional, nonprofit, and trust customers. Through Max, ADM offers a preferred yield of 0.75% on balances up to $5 million, and a competitive yield on balances up to $50 million, all FDIC-insured. ADM clients include top U.S. corporations, municipalities, universities, public funds, non-profits and trusts.

Learn more about Max for Business or contact member.services@maxmyinterest.com.